Resources Connection Inc (RGP) 2013 Q1 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. And, welcome to the Resources Global Professionals first quarter 2013 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

(Operator Instructions)

As reminder, today's conference may be recorded. It's now my pleasure to turn the floor over to Kate Duchene. Ma'am, please go ahead.

Thank you, operator. Good afternoon everyone, and thank you for participating with us today. Joining me on this call are Don Murray, our Chairman and Chief Executive Officer, Tony Cherbak, President and Chief Operating Officer, and Nate Franke, our Chief Financial Officer.

During this call, we will be providing you with comments on our results for the first quarter of fiscal year 2013. By now, you should have a copy of today's press release. If you need a copy, and are unable to access a copy via our website, please call Patricia Marquez at (714)430-6314 and she will be happy to fax a copy to you.

Before introducing Tony, I would like to read an important announcement about certain statements that we may make during this call. Specifically, we may make forward-looking statements. In other words, statements regarding future events or future financial performance of the company. We wish to caution you that such statements are just predictions and actual events or results may differ materially. We refer you to our form 10-K report for the year ended May 26, 2012 for a discussion of some of the risks, uncertainties, and other factors such as seasonal and economic conditions that may cause our business, results of operations, and financial condition to differ materially from results of operations and financial conditions expressed, or implied, by forward-looking statements made during this call. I'll now turn the call over to Tony Cherbak, President and Chief Operating Officer.

Thanks, Kate. Good afternoon and welcome to the Resources Global first quarter conference call. I'm going to begin by giving you a brief overview of our first quarter operating results.

Total revenue for the first quarter of fiscal 2013 was $136.9 million, slightly less than a 1% decrease from the comparable quarter a year ago. And, a decrease of 5.9% from our fourth quarter revenue of $145.5 million. First quarter gross margin was 39%, representing an increase of 120 basis points from the comparable quarter a year ago, and a sequential decline of 120 basis points from last quarter. The sequential decrease stems from -- primarily from the impact of two national holidays in the US during the quarter. During the first quarter, our SG&A costs were $42.1 million, a $500,000 decrease from the comparable quarter a year ago and similar to last quarter.

In Q1, we generated adjusted EBITDA and cash flow from operations of $13.1 million and $3.7 million respectively. For the quarter, our pretax income was $9.8 million. Our GAAP net income was $4.8 million, or $0.12 a share. Our GAAP net income reflects an effective tax rate of 50.5% while our cash tax rate remains at approximately 42%, an impact of $0.02 per share. Nate will provide more detail on each of these items later in the call.

During the first quarter, we returned $11 million to our shareholders in the form of a stock buy-back of approximately 765,000 shares in our regular quarterly dividend. In addition, our Board approved a 20% increase in our quarterly dividend effective last month to $0.06 per share from $0.05 per share. As we reported in July, non-holiday weekly revenues for the first six weeks of the first quarter averaged $11.1 million. During the final seven weeks of the quarter weekly revenues ranged from $10.3 million to $11 million, averaging $10.6 million per week as summer vacations increased in Europe and the US in July. We experienced a similar pattern of vacation usage by our consultants as in prior years.

Despite continuing reports of a slowing global economy, our business remains stable and we continue to improve our quarter over quarter operating metrics. Our US revenue increased 4.5%, quarter over quarter, while our European and Asia-Pacific revenues decreased 7.7% and 6.5% respectively on a constant currency basis. While European-based clients remain cautious, we are pleased to see increasing in business volumes following the summer holiday season. Average weekly European revenues during the first four weeks of our second quarter are trending slightly above the average weekly revenues during June, the month preceding the summer holiday season. Consequently, we continue to believe that our European business remains stable despite economic turmoil in the region. With that, I will now turn over the call to Nate for a detailed review of our financial results.

Thank you, Tony. As mentioned, revenues for the quarter were $136.9 million, versus $138 million in the first quarter of fiscal 2012, a quarter over quarter decrease of 0.08% and a sequential decrease of 5.9%. As anticipated, our first quarter revenues were impacted by summer vacations, both in the US and Europe. On a constant currency basis, revenue increased 1.2% quarter over quarter and decreased sequentially by 5.3%. For the first quarter, revenues in the US were $104.8 million, up 4.5% quarter over quarter and down sequentially by 3.6%. For the first quarter, total revenues internationally were $32.1 million versus $37.8 million in the first quarter a year ago. A decrease of 15.1% quarter over quarter and a decrease of 13% sequentially.

The sequential revenue decreases in the US and internationally stem from the impact of summer vacations. International revenue accounted for approximately 23% of total revenues for the quarter compared to 25% last quarter. Europe's first quarter revenues decreased 18.5% quarter over quarter and 18.1% sequentially, while the Asia-Pacific region saw first quarter revenues decrease 6.5% quarter over quarter and 2.9% sequentially. On a constant currency basis, total international revenue decreased 7.9% quarter over quarter and 10.6% sequentially. On a quarter over quarter and sequential basis, the US dollar was stronger against most currencies in Europe. As a result, on a constant currency basis, Europe's revenue decline quarter over quarter would have been 7.7% and Asia-Pacific's decrease would have been 6.5%. On a sequential basis, Europe's revenue decrease would have been 14.2% and Asia-Pacific's decrease would have been 4.9%.

Let me now discuss early revenue trends for the second quarter of fiscal 2013. Weekly revenues for the first four weeks of the second quarter, were $10.7 million, $9.8 million during Labor Day week, $11.4 million, and $11.4 million. As we closed out the summer vacation season, it is encouraging to see our weekly revenue trends returning to pre-summer levels. In thinking about the second quarter, it is important to remember that in addition to Labor Day, we will lose about two days of revenue in the US due to the Thanksgiving holiday in November.

I will now discuss gross margins. Gross margin for the first quarter was 39% versus 37.8% in the year ago quarter, and 40.2% in the fourth quarter of fiscal 2012. A sequential decline of 120 basis points results from two paid holidays in the US occurring during the first quarter. The quarter over quarter increase of 120 basis points stems primarily from improved bill pay spreads and a reduction in zero margin reimbursable expenses. Excluding reimbursable expenses, our gross margin -- our first quarter gross margin was 39.7% which compares to 38.8% in the first quarter a year ago. The average billing rate for the quarter was approximately $126, compared to $129 in the fourth quarter and the year ago quarter.

The average pay rate for the first quarter was approximately $63, versus $64 in the fourth quarter and $65 one year ago. Please remember these hourly rates are derived based upon prevailing exchange rates during each given period. The decrease in both bill and pay rates this quarter is substantially reflective of the strengthening US dollar's in the first -- of the strengthening US dollar in the first quarter. We expect gross margin in the second quarter of fiscal 2013 to approximate the first quarter's gross margin. For the first quarter, gross margin in the US was 40.3% and our international gross margin was 34.6%.

Now, to head count. For the first quarter, the average consultant FTE count was 2,270. This compares to 2,284 in the previous quarter and 2,232 in the year ago quarter. At quarter end, consultant headcount was 2,284 versus 2,317 a year ago. The total headcount of the company was 2,959 at quarter end.

Selling, general, and administrative expenses for the first quarter were $42.1 million, or 30.8% of revenue, versus $42 million in the fourth quarter of fiscal 2012. SG&A was approximately $42.6 million, or 30.9% of revenue, in the first quarter of fiscal 2012. SG&A expenses were lower than anticipated, primarily due to foreign exchange rates and slight reductions in other expense categories. We anticipate SG&A expenses in the second quarter of fiscal 2013 will approximate that of the first quarter. Stock compensation expense was $1.8 million, or 1.3% of total revenue, similar to amounts recorded in the fourth quarter last year and the first quarter of fiscal 2012. We would anticipate quarterly stock compensation expense in the upcoming quarters to increase slightly from the amount recorded in the first quarter.

At the end of the first quarter, our office count remained at 77, 50 domestic, 27 international. Related to the other components of our financial statements, depreciation and amortization was $1.6 million for the quarter, compared to $1.8 million last quarter. We would expect depreciation and amortization expense for the upcoming quarters to be similar to that of the first quarter. Our adjusted EBITDA, or cash flow margin, which we defined as EBITDA before stock compensation and contingent consideration adjustments, was 9.6% in the first quarter. An increase from 8.3% a year ago and down due to seasonal factors from 12.6% in the fourth quarter of fiscal 2012. Our pretax income was $9.8 million for the quarter.

During the first quarter, we provided an income tax provision of $4.9 million representing an effective tax rate of 50.5%. Our effective tax rate is impacted by our current inability to offset income in tax jurisdictions in which we are profitable with losses in several tax jurisdictions in which we are not profitable. Our GAAP tax rate for each of the upcoming quarters is difficult to predict and could be volatile as the rate will be dependent on several factors. Including the operating results of our US and foreign locations, each of which are taxed or benefited at different statutory rates and the offset of the tax benefit of foreign losses in certain locations by valuation allowances. On a cash basis, our tax rate was about 42% and we expect that rate to continue over the next couple of quarters. In summary, our GAAP per share income was $0.12, during the first quarter. On a non-GAAP basis, but consistent with many analyst models which utilize a cash tax rate of 42%, our per share income would have been $0.14 for the first quarter.

On to our balance sheet. Cash and investments at the end of the first quarter were $122.9 million, a $5.2 million decrease from the end of fiscal 2012. This decrease stems primarily from share repurchases and dividends totaling approximately $11 million during the quarter, partially offset by cash generated from operations of $3.7 million. Capital expenditures were $590,000 during the quarter. During the first quarter, we repurchased approximately 765,000 shares of our common stock at an aggregate cost of $8.9 million, or $11.67 per share. Our current Board authorization for our stock buyback program has approximately $97.8 million remaining. We will continue to return cash to shareholders through our dividend and share repurchases while maintaining a balance between the capital requirements of growing our business and fiscal prudence. Our shares outstanding at the end of the first quarter were approximately 41.5 million.

Receivables at quarter end were approximately $86.2 million, compared to $84.2 million at the end of the fourth quarter. Days of revenue outstanding were approximately 55 days, the same as in the fourth quarter of fiscal 2012. Now, I would like to turn the call over to Don for some closing thoughts.

Thanks, Nate. We are pleased with the continued progress we made in the first quarter to improve our operating metrics. Our collective efforts resulted in an increase in our adjusted EBITDA margin to 9.6% from a 8.3% a year ago. We remain focused on growing our global business across all service lines, and further leveraging our operating results. Let me update you on a couple of specific areas of opportunity for us. Our efforts to expand the depth of our services we can provide to our healthcare clients are bearing fruit. In the past few weeks, we have won new engagements encompassing electronic medical record system implementation, post implementation system support, and regulatory compliance.

Given the magnitude change occurring in this space, we believe the healthcare industry offers long-term growth opportunities for all our service lines. We continue to see new projects with our financial services clients related to Dodd-Frank legislation. And, after a long delay, in late August the FCC issued regulations related to the conflict mineral section of the Dodd-Frank act. While Dodd-Frank was widely viewed as an instrument of financial reform, it also sets forth significant changes to the reporting of supply chains of SEC filers.

The SEC estimates that about 6,000, or about 50% of the SEC registrants, will be impacted. So, companies are required to assess their supply chains to dispose whether conflict materials are used in their products. Because conflict materials are used in many common consumer products such as jewelry and electronics, as well as the pervasive use in the alloy, solder, medal wires, electroids, packaging, and promotion materials, compliance with this rule is expected to be a very significant undertaking over the next 12 to 18 months for many companies. Our supply chain, finance and accounting, and legal service lines are positioned to assist existing and new clients to comply with these new rules.

Now, let me share some additional statistics which we believe reflect the continuing health and strength of our core business. So, client continuity remains outstanding. During the first quarter, we served all of our top 50 clients from fiscal 2012 and fiscal 2011. In fiscal 2013, we have 216 clients for whom we provided services exceeding $500,000 in fees on a run rate basis, down slightly from 229 in 2012. As we progress further into fiscal 2013, I believe we will report an increase in these clients from 2012 levels.

Our top 50 clients represented 43.2% of total revenues while 50% of our revenues came from 71 clients. Our loyal client following is reflective of our client service approach and the quality of the work performed by our consultants. Our largest client for the quarter was approximately [4.6%] of revenue. Through the first quarter, 90% of our top 50 clients used more than one service line. 64% of those top 50 clients have used three or more service lines. This service line penetration reflects the diversity of relationships we have within our client's organizations. This concludes our prepared remarks. We would be happy to answer your questions at this time.

Thank you, sir.

(Operator Instructions)

Sara Gubins, Bank of America Merrill Lynch.

Hi, thanks, good afternoon. Could you talk about -- more on conflict minerals, the provision, I'm glad that you mentioned. Are you starting to see clients begin to spend in preparation for it now?

Sara, what I would tell you is some companies, and what I would label them is probably the largest consumer product companies, electronic companies, have already started. And, I will tell you we are at the infancy of probably the other companies.

I think a lot of folks didn't believe that this was passed or didn't even know it was in the Dodd-Frank. So, we are busy educating our clients and putting outreach programs in place to get people educated. So, I think we are at the very infancy of it for most companies.

But, we have started some projects, though, in that area already.

Great. And then, directionally, if you could just talk about relative strength of various types of work. And, specifically, I'm wondering if you are seeing companies ramp their IT related projects more than other types of projects?

We are seeing a lot of work in IT, Sara. Generally around regulatory compliance or the getting -- working on a SAP implementation or, say, a Hyperion implementation. People are trying to get more out of the data that they have available to their companies.

And, this usually works with trying to put in a Hyperion system or Cognos system. There is a lot of work in IT. Similarly, we are seeing work in supply chain. As well as in finance and accounting, working with companies to help them with the SEC filings, M&A integration, and so on.

Great, thank you.

Molly McGarrett, JPMorgan.

Hi, I was just wondering if you could talk about your European business and what you're seeing by region over there?

I would say Europe remains soft with all the financial uncertainty over there. We've focused on in Europe trying to increase new revenue sources but at the same time we are really improving our operating metrics there to become profitable in this downsized environment there.

The two things we have going against us in Europe is the US currency strength compared to the euro in the last three months and the European economy. The positive trend is European companies don't want to really hire. We are still getting new projects, though, as they are trying to get work done without making new hires in the area.

And, one of the -- our strongest practice over there right now is really Germany and that is pretty consistent with how they are performing on a world market. For the balance of the countries, there are so many austerity programs in place right now, it's tough, but we believe that our business over there is pretty stable.

Okay, thanks. And then, can you just talk about the M&A environment? Any areas that you are looking to be acquisitive?

We are looking to be acquisitive for consulting services that help us go upstream more or consulting services that strengthen parts of our practice like healthcare consulting services. We're looking at different types of things. It could be a litigation support business. So, we haven't narrowed it down. We are just looking at whatever we see would help us, but we're not willing to pay crazy money for it.

Okay, great, thank you.

Kevin McVeigh, Macquarie.

Great, thanks. Quarterly trends were pretty helpful. If I assume $10 million to $12 million in incremental revenue sequentially, is a 6% to 8% incremental EPS impact a good way to frame that? In terms of Q1 into Q2 from an EPS perspective?

I think, Kevin, that if you -- so, the four weeks of revenue that we gave aggregated to right around $43 million, there is obviously nine weeks remaining. And, we don't really give forward guidance, but using those run rates, keeping in mind that one of the weeks was obviously Labor Day, you can go through and do the math. Again, with the caveat that we will lose two days in the last week of the quarter. I think our comments -- we also gave comments on the key expense categories around where we thought gross margin and SG&A would be.

Sure. And then, Nate, is it fair to say you don't expect much incremental acceleration off the 11.4% level based on the project you have out there? Or should we use that as a baseline and adjust it for the two fewer days?

Again, I think we are optimistic, as you point out, the early trends coming out of the summer were very nice to see. Obviously, we are in a somewhat volatile environment with the election coming up and the issues here as well is Europe. But, I think we are pleased with where we are today and we are working forward in lots of different places as Don mentioned in his comments. But, we have really never given growth expectations.

Sure. Tony, could you just remind us, in terms of Europe, out of 100%, how much comes from Germany versus -- or if you don't want to get that granular, Northern year versus Southern Europe, just to gauge the revenue footprint over there at this point?

I think what we have always said is that Europe is about two-thirds of the international revenue which makes up 23% this quarter of total revenues and Asia-Pacific is the other half. We have never really got more granular than that.

Super, okay, thanks. Nice job.

Thank you, sir. Gary Bisbee, Barclays Capital.

Hi, guys, good afternoon. I guess the first question, Don, on the commentary on M&A, you said specifically hiring and consulting and then you mentioned a couple consulting type practices. Does this mean more of a -- less of a temp model, more of a focus on full-time staff? And, if so, how do you think about dealing with the demand ebbs and flows that the business has seen over time if you're having more of a fixed cost?

We would probably look to continue our current business model for the majority of our business. If we acquire a consulting firm of -- let's say as we did with the restructuring business practice, we would have one or two primary practitioners. And then, as they need staff to help them we then provide them our consultants which are on our current model. We wouldn't -- we don't envision changing our financial metrics by any significant way with acquisitions.

Yes, we're not looking to go to a utilization model. More to leverage up potential businesses with our own consultants.

Okay, all right, that make sense. And then, any change in willing -- you talked a lot about the overseas demand and the US looks like it's chugging along about like last quarter. But, any change in the willingness to start projects either around all the political and economic uncertainty here or the fiscal cliff issue? Or are you seeing the US demand remains fairly stable like it's been the last few quarters?

I think we believe the US is fairly stable. We're seeing a fairly good amount of deal flow. But, as we talked about in the last couple of quarters, clients tend to be managing very tightly to budgets. So, as you are starting new engagements, other ones are ending. And, as we commented in the past, in better economic times our clients would extend projects and add other phases to them. And, in this environment, everybody is focused on the projects budget. So, the flow still seems to be fairly good.

And then, at the end of the press release, if I am reading this right, it says cash flow from investing generated $12 million. Did you sell a building or an asset or something or is that a typo?

I think that's just the movement from short-term investments into cash.

Okay, got you. And then, I'm sorry, Nate, I missed your comment on what SG&A would trend like sequentially into Q2. Could you repeat that please? Thank you.

I think we said it would be similar to the Q1 level.

Okay, great. Thanks, a lot.

No problem, Gary.

Kelly Flynn, Credit Suisse.

Thanks, guys. I have a bunch of small questions. First one on the Asia constant currency. You said it a couple of times but I just want to make sure that the constant currency in the reported for Asia were the same at negative 6.5%?

Yes.

Okay, great.

There's a little bit of an offset between the yen and the other currencies that negated each other.

Okay, great. And then, on the comments about Thanksgiving, I just want to make sure, given the timing, that is obviously a sequential comment. I just want to make sure there's -- is there anything year-over-year that should cause a discrepancy in the growth rates?

No, just obviously the currency that we have mentioned. But, other than that, there is no fundamental changes quarter-over-quarter.

All right, great. And then, for the first four weeks, forgive me if you already gave this, but the first four weeks of the quarter that we are in, can you give Europe versus US which I think you did last quarter?

Yes, we don't -- I don't think we have broken those out, and I actually don't have those right in front of me.

Okay, that is fair. And then, I guess similar question to Gary's, last one, did you say gross margin was flat Q2 versus Q1?

Yes, that's what we would anticipate. Two holidays in Q2 with Labor Day and Thanksgiving. So, very comparable sequentially.

Okay, perfect. Thanks, a lot.

You bet, Kelly.

Timothy McHugh, William Blair.

Hi, this is Stephen Sheldon in for Tim. Thanks for taking my question. Could you maybe talk a little more about the bill pay spread? We have heard it's a challenging market to find talent right now. How is that impacting the business in terms of the bill pay spread?

I would tell you that we generally have done pretty well finding talent. Aside from the currency fluctuation, the bill and pay have been relatively stable. What you do find in certain situations is clients have very precise needs. And so, they might be very -- have a very high level of precision in the skill sets they want. So, it can take a little bit longer to find the people. There are some areas in healthcare that can take a long time because finding people with some of the newer technologies is hard. But, I think what you can see from the bill and pay spreads and the stability of the margins over the last couple of quarters, we seem to be managing through that.

Okay. And then, one more if I could.

Sure.

For the purposes of conflict mineral audits, I believe the SEC ruled that existing financial auditors would not be precluded from going after that work. Are you guys already seeing competition from the big four? And, how do think they will complete for that business?

Clearly, I think the most immediate opportunity over the next year is going to be helping companies go through the compliance effort and digging back through that supply chain. So, I would tell you that that is our -- currently our primary focus. But, your statement is correct. Non-CPA firms will be allowed to do those audits. And so, we would anticipate us doing those audits to the extent the client did not use us for -- we would shoot for that work if they did not use us to help them with their compliance. You still have to maintain a degree of independence from the conflict minerals process. But, clearly, I think there will be a number of firms out there competing for that work. The big four and the other national firms that have the audit brand will obviously chase that work as well as other firms.

All right, thanks.

Paul Condra, BMO.

Great, thanks. I just wanted to follow-up on the capital expended for the year because, I think, prior you had said you expected $3.8 million in 2013. And, its looking a little -- I'm just wondering how that's going to look for the rest of the year. Are you still sticking to that?

I think for the year that is our -- the same estimate that we made last quarter and it sticks. I would tell you that the majority of that is going to be in the back half of the year. I would probably expect in Q2, $700,000 or $800,000 with the remainder in the back half, just the way the different leases are turning. Now, a big chunk of that will ultimately be reimbursed by landlords, but GAAP says for us to treat it all as CapEx.

Okay, that's great. And then, on the first four weeks of the revenue, did you say how that compared year-over-year?

Year-over-year, it, I think, was up about 1% all in.

Okay, that's all. Thanks, a lot.

(Operator Instructions)

Mark Marcon, Robert W. Baird.

I wanted to get a little bit more detail with regards to the international. Could you give us the breakout for the Netherlands like you normally do?

Yes, Mark, we've -- so much of the work now in Europe, and actually I would tell you the most recent wins is a lot of cross-border activity in Europe is starting to operate much more as one Europe. So, we are probably not going to segregate out the individual countries. What I would tell you, is we have a whole host of projects now that are much more cross-border oriented with some large companies doing financial transformation and that type of stuff. We're getting Europe much more focused on operating as a unit despite being governed by individual countries.

Okay. So, from that perspective, would you -- you mentioned that in Europe things were rebounding back to pre-holiday levels. It sounds like what you are basically saying is things are fairly stable over there, just by everything that we read.

That, I think, Mark, that's a very good synopsis. We hear other folks say that it's a little bit different climate, but based on what we are seeing and the fact that we bounced back fairly quickly from the pre-holiday says to us that it's reasonably stable. Obviously, it can be very volatile over there with the economic environment. But, as Don mentioned, there seems to be quite an aversion from the large companies to hire over there.

Understood. And then, with regards to Asia-Pac, on a constant currency basis, that got a little bit worse. Was that primarily the trends that you were seeing in China that you talked about during --?

China, Mark, is down a little bit just because we are having some difficulty with the various different practices over there. Hong Kong is primarily a financial institutions practice and we have had a little bit of struggle with the financial institution companies. In Shanghai, we are also getting hit from a rate perspective. But, in -- I will tell you that the China losses have been negated by the profits in Japan, or the revenue growth in Japan has offset the revenue declines in China.

We are not losing money in China. We don't have China losses.

Right.

It's more the non- growth in revenue in China which we had experienced last year.

Right.

And, can you discuss a little bit what you're seeing in terms of the mid-market initiative that you discussed last time? And, also, how -- you've kept the SG&A pretty flattish here now for eight straight quarters. How should we think about that progressing above and beyond the second quarter which again looks like it's going to be steady-state?

We constantly control SG&A and we are being very careful on making investments. The middle market initiative, we really only launched it in one area and that has been successful and they're selling work, and the work, then, is being done by our consultants. We anticipate having three more, four more regions with middle market initiatives launched in this next quarter. So, we would expect to see, and evaluate the results of how they're doing after next quarter. So, SG&A, it's -- we're keeping a tight reign on it unless we see opportunities for really robust growth like we do in healthcare solutions.

Thank you.

Kelly Flynn, Credit Suisse.

Thanks. Just following up on a question. A few questions ago someone asked what the year-over-year growth was in the first four weeks of the quarter. I think you said it was up 1%, but I have typed in the trends you gave out last quarter and I am showing it down 2% year-over-year.

I think what I was looking at it was on a currency -- adjusted currency, I think you're right that on a GAAP basis, it is down 1% to 2%.

Okay.

I apologize, Kelly.

No problem, I just wanted to clarify. Thanks, a lot.

(Operator Instructions)

Tim McHugh, William Blair.

Sorry, I had one more question and sorry if I missed this earlier. How much revenue came from the [citric] business?

About $4.3 million.

Okay, great, thanks.

Thank you, Sir. Presenters, at this time I am showing no additional lines in the queue. I would like to turn the program back over to Mr. Don Murray for any additional or closing remarks.

Yes, would like to thank all of you for your continued support and interest in Resources. We look forward to our next update in December for the second quarter of 2013.

Thank you, Sir. Again, ladies and gentlemen, this does conclude today's conference. Thank you for your participation and have a wonderful day. Attendees, you may disconnect at this time.